HEROES

APPLIED COMPUTER TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ACTI)") else Response.Write("(Nasdaq: ACTI)") end if %> gained $5 7/16 to $8 1/16 after the value-added reseller and systems integrator of PCs, networks, and other information technologies said it has won a multi-vendor contract from the National Institutes of Health worth up to $350 million annually. The problem with today's run up is that the company needs to win about 50% of these multi-vendor bids to justify today's severe rise in price. That also assumes NIH uses its full budget authority here and Applied gets to the high end of the normal 2% operating margin range for these sorts of companies. Those profits would offset the company's current operating margin of negative 25% (backing out inventory writedowns and other one-time charges). Realistically, investors might want to estimate a best-case scenario for one vendor in a multi-company contract at about 20% of that contract, use realistic margins, and not assume something should carry a high P/E ratio because it has grown earnings from a base of zero or next to zero.

GREAT PLAINS SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GPSI)") else Response.Write("(Nasdaq: GPSI)") end if %> advanced $2 to $29 1/8 after the accounting software and services company reported a 52% increase in first quarter revenues and EPS of $0.11, besting the mean estimate of $0.09. Contrary to the model of software companies providing the shrink-wrapped product and then bugging out after the 30-day free service period, Great Plains embraces service in its business model. In fact, service revenues comprised one-third of total 1997 revenues. The company guarantees service response time, has dedicated service people for customers, and provides software service specialists for certain industries. Operating in the accrual accounting software space where INTUIT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTU)") else Response.Write("(Nasdaq: INTU)") end if %> provides weaker competition, Great Plains has a bright future, but this is also reflected in its price.

Food processor and processing technologies company EPL TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EPTG)") else Response.Write("(Nasdaq: EPTG)") end if %> rose $1 5/8 to $8 after being granted a 10-year license to market fresh-cut potato products under the Green Giant brand name, launching the company into what it believes is "...singularly the most significant economic opportunity in the North American foodservice market today." This market segment is measured in the billions of pounds per year, and EPL is pretty psyched about the opportunity "to offer a fresh, consistent high quality, french fry product, the likes of which we believe has never been seen before."

QUICK TAKES: INLAND CASINO CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INLD)") else Response.Write("(Nasdaq: INLD)") end if %> rose $3 7/8 to $7 1/8 on reporting a 167% increase in Q4 EPS of $0.24, which was greatly helped by a 51% share buyback... RICHARDSON ELECTRONICS LTD. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RELL)") else Response.Write("(Nasdaq: RELL)") end if %> moved up $3 to $12 after the electronics distributor reported Q1 EPS of $0.11, beating the lone First Call estimate of $0.07 a share... Photoreactive drug developer MIRAVANT MEDICAL TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MRVT)") else Response.Write("(Nasdaq: MRVT)") end if %> gained $9 3/4 to $58 1/4 after Robertson Stephens kicked off coverage of the company with a "buy" rating, pointing to the low FDA approval risk profile... Pharmaceutical development company GELTEX PHARMACEUTICAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GELX)") else Response.Write("(Nasdaq: GELX)") end if %> jumped $3 3/4 to $26 after announcing positive Phase II clinical trial results for its cholesterol-reducing drug... Home healthcare company AMERICAN HOME PATIENT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AHOM)") else Response.Write("(Nasdaq: AHOM)") end if %> rose $2 5/8 to $22 1/4 on announcing a major restructuring in response to planned cuts in Medicare reimbursement... Biopharmaceutical company AVIRON INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AVIR)") else Response.Write("(Nasdaq: AVIR)") end if %> pulled ahead $2 5/8 to $22 1/4 on reporting positive Phase III results for its intranasal respiratory vaccine... Pharmaceutical company U.S. BIOSCIENCE <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: UBS)") else Response.Write("(AMEX: UBS)") end if %> added $1 1/16 to $10 15/16 on a Gruntal & Co. upgrade to "strong buy" from "buy."

GOATS

Supply chain management software firm MANUGISTICS GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MANU)") else Response.Write("(Nasdaq: MANU)") end if %> fell $2 7/8 to $40 1/8 after Morgan Stanley Dean Witter analyst Chuck Phillips initiated coverage of the company with a "neutral" rating based on valuation. Manugistics has successfully operated in a product niche that until recently the large enterprise resource planning firms hadn't fully integrated into their product suites. The threat to Manugistics now comes from organizations like SAP that have diversified into the supply chain realm and can offer their existing customers the option of "home grown" solutions versus the Manugistics add-ons. Despite this development, Manugistics is the acknowledged leader in the business with respect to software functionality and implementation expertise. Compared to its only other pure-play public rival, I2 TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ITWO)") else Response.Write("(Nasdaq: ITWO)") end if %>, Manugistics trades at 8 times trailing sales and 78 times forward earnings, a discount to its lesser-known rival, which trades at over 9 times sales and 106 times forward earnings.

Midrange server software and PC software tool company COGNOS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COGNF)") else Response.Write("(Nasdaq: COGNF)") end if %> took it on the chin today, falling $10 23/32 to $22 1/32. Cognos has indicated that growth in its upcoming third and fourth quarters will slow down to 20%-25%, from 30%. Although the company met consensus earnings expectations of $0.24 per share for the second quarter and announced a cash acquisition that will apparently be accretive to earnings, the negative guidance, the lack of an earnings surprise, and a downgrade from Needham & Co. to "buy" all conspired against the company. The Needham analyst lowered 1998 earnings estimates to $1.00 per share from $1.13 a share and 1999 estimates to $1.27 a share from $1.44. With the shares priced at 23 times the Needham 1998 estimate, the company's rich absolute valuation may be offset by the high rate of earnings growth. However, investors are apparently not willing to believe that even the revised estimates are accurate.

Clothing designer MOSSIMO INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MGX)") else Response.Write("(NYSE: MGX)") end if %> announced that some investors have filed a lawsuit against the company accusing it of offering "overly optimistic financial forecasts to falsely inflate the stock price." The announcement deflated the company's stock today $15/16 to $9 5/8. The plaintiffs contend that throughout the spring and summer of 1996, Mossimo reported explosive sales growth and strong margins and assured investors that its clothing lines were being enthusiastically received by retailers. However, the plaintiffs allege, in reality Mossimo had completely lost control of operations and finances to the point that it was unable to ship merchandise to customers in a timely fashion and maintain control over its inventories, and that it "purposefully" misled investors. However, a glance at the company financials would have revealed ballooning inventories, low turns, and erratic collections of receivables. An analysis of these figures could have saved investors some money.

QUICK CUTS: Circuit board components manufacturer PARK ELECTROCHEMICAL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PKE)") else Response.Write("(NYSE: PKE)") end if %> fell $2 1/16 to $29 1/4 after it posted 2Q EPS of $0.42, missing expectations of $0.45... Server company DATA GENERAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DGN)") else Response.Write("(NYSE: DGN)") end if %> lost $1 3/4 to $26 after announcing that it will subcontract portions of its COBOL migration, program creation, Year 2000 impact analysis, and source code modification to EGAN SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EGNS)") else Response.Write("(Nasdaq: EGNS)") end if %>... Industrial and automotive products company FIRST BRANDS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FBR)") else Response.Write("(NYSE: FBR)") end if %> dropped $1 5/8 to $25 after Credit Suisse First Boston analyst Marta Bialek initiated coverage of the company with a "hold" rating... Goldman Sachs analyst Stephen Dobi downgraded CONGOLEUM CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CGM)") else Response.Write("(NYSE: CGM)") end if %>, a maker of resilient vinyl flooring, to "market underperformer" from "market outperformer," slamming the stock $11/16 to $11 13/16.

ARRIS PHARMACEUTICAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ARRS)") else Response.Write("(Nasdaq: ARRS)") end if %> dropped $2 to $12 7/16 after results of its most recent trial of APC-366, a tryptase inhibitor for the treatment of asthma, showed "improvement" over the placebo control in two-thirds of the patients studied -- results that were not statistically significant... Data storage systems STORAGE DIMENSIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: STDM)") else Response.Write("(Nasdaq: STDM)") end if %> dropped $7/8 to $5 1/2 after announcing that it expects to report a net loss of about $0.10 to $0.14 per share on net sales of approximately $16 million... Teleconferencing systems company VTEL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VTEL)") else Response.Write("(Nasdaq: VTEL)") end if %> was dropped for a $13/16 loss to $6 1/16 after it posted 4Q EPS of a loss of $1.52 per share... Shares of ABF Freight System Inc., a subsidiary of ARKANSAS BEST CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ABFS)") else Response.Write("(Nasdaq: ABFS)") end if %>, dropped $1 to $10 1/2 after the company said it does not plan a general increase in its freight rates for the remainder of 1997.

FOOL ON THE HILL
An Investment Opinion by Randy Befumo

Camelot: A Vulture Rising from the Ashes

Like a vulture rising from the ashes, CAMELOT CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAML)") else Response.Write("(NYSE: CAML)") end if %> has been reborn -- again. The holding company's shares rose $4 3/16 to $10 1/4 today after yesterday issuing a dramatic announcement designed to incite investor enthusiasm. Add this to the $2 21/32 increase in the shares yesterday and you have a 201% move in less than 48 hours -- not bad for one press release. Camelot reported yesterday that it has arranged a series of meetings with the world's top ten PC manufacturers to demonstrate its VideoTalk Internet videoconferencing technology -- an application it claims can deliver high-quality videoconferencing for a fraction of the cost of other systems.

Camelot says that VideoTalk is a complete hardware and software system that can be connected to PCs with multimedia capacity to turn them into videoconferencing devices. VideoTalk allegedly allows full-duplex over local and wide area networks without requiring a soundcard or a video capture card, allowing users with 28.8 kpbs modems to use the product with extremely low processor loads. All you need is a VideoTalk add-in card, a NTSC color video camera, a handset, and the VideoTalk and DigiPhone software. Although not explicitly stated, the implication of the press release is that the deals with top PC manufacturers are pretty much fait accompli after it finishes up the one-on-one demonstrations over the next two months.

Unfortunately, all of this big talk is not the first time Camelot and Chief Executive Daniel Wettreich have made big promises to investors. The company's DigiPhone product, released with great investor fanfare but little consumer interest in 1995, is one of the core elements of the new VideoTalk product. Promises of up to 200 "Mr. CD-ROM" retail stores selling CDs flopped after the first store, now closed, failed to get off the ground. Camelot's history, even before DigiPhone and Mr. CD-ROM, can be called checkered at best. Originally beginning life as Bolyard Oil & Gas, the company changed its name to Camelot Corp. in 1989. Management has tried everything from selling real estate to retailing -- normally focusing in on whatever has been perceived as hot or popular at the time in a manner that can only be labeled as opportunistic.

Camelot's well-orchestrated plan to increase the value of its shares began on July 15, when the company did a 1-for-40 reverse stock split in order to bring the shares back to significance. Trading as low as 12 cents a share in June, the 1-for-40 reverse split brought the stock back up to the $5 to $10 range most serious investors usually require. Camelot's decision to do the reverse-split only two months before its big product announcement shows a degree of forethought and premeditation normally reserved for business plans. As a result of the split, the shares now appear to be higher than the 1995 price of $7 15/16 per share, hit amidst the excitement about the DigiPhone. Many of the historical stock quote engines have not caught up with this change, and fail to show that the actual split-adjusted 1995 high is a whopping $317 1/2. This means that investors who bought into the company's big talk in 1995 about DigiPhone and the vast chain of Mr. CD-ROM stores have basically lost all of their money -- even after the gigantic move in the stock over the last two days.

When the DigiPhone was originally released, Wettreich claimed the company had no real competition. "By the first quarter of [1996], we will have five million potential users via strategic partnerships." But with VOCALTEC <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VOCLF)") else Response.Write("(Nasdaq: VOCLF)") end if %> holding more than 80% of the Internet phone market and locked into a pretty sweet deal with Deutsche Telecom, Wettreich's imagined future has not come to pass. With DigiPhone failing in at least three public demonstrations in 1995, it is not even clear if Camelot is going to be able to get the thing to work when it shows it to the PC manufacturers. Additionally, unless the company has some kind of patent protection on the VideoTalk component of the product, it may not even be able to keep competitors from ripping it off. Wettreich admitted in 1995 that Camelot had no patents on the DigiPhone -- which was why Quarterdeck was able to come out with a substantially similar Internet phone only a week after Camelot announced its device.

Unfortunately for novice investors, Camelot executives and directors know what gets excited beyond reason. Much like C-PHONE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CFON)") else Response.Write("(Nasdaq: CFON)") end if %> and the now defunct Systems of Excellence, when companies start talking about cheap videoconferencing via the Internet people apparently check their brains in at the door. With C-Phone down substantially from its December 1996 highs and Systems of Excellence completely bankrupt, one would think people might eventually learn that all that glitters is not a successful consumer videoconferencing technology. Given Camelot's past history of encouraging unrealistic expectations, if anyone is rushing headlong into taking a position in the company, it should probably be as a short, not as something they anticipate to increase in value. Certainly, there is a massive gap between the issuance of a press release and the signing of original equipment manufacturer (OEM) agreements with major PC companies that people are not really thinking about today.

CONFERENCE CALLS

COREL CORPORATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COSFF)") else Response.Write("(Nasdaq: COSFF)") end if %>
(416) 626-4100 (code: 633413) -- replay

CABLETRON SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CS)") else Response.Write("(NYSE: CS)") end if %>
(402) 220-4881 -- replay through 9/29

COGNOS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COGNF)") else Response.Write("(Nasdaq: COGNF)") end if %>
(800) 997-6906 -- replay through 9/30

09/30/97 (Tuesday)
CANANDAIGUA BRANDS, INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CBRNA)") else Response.Write("(Nasdaq: CBRNA)") end if %>
(800) 964-3296 -- replay through 10/2

THIS WEEK'S CONFERENCE CALL SYNOPSES

3COM <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COMS)") else Response.Write("(Nasdaq: COMS)") end if %> Call
MICRON ELECTRONICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MUEI)") else Response.Write("(Nasdaq: MUEI)") end if %> Call
MICRON TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MU)") else Response.Write("(NYSE: MU)") end if %> Call

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Randy Befumo (TMF Templr), a Fool
Alex Schay (TMF Nexus6), Fool Two
Dale Wettlaufer (TMF Ralegh), Fool Three
Contributing Writers

Brian Bauer (TMF Hoops), another Fool
Editing